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Saturday, December 24, 2016

Foreign Steel

Many of President-elect Donald Trump's cabinet picks are titans of industry with significant potential business conflicts of interest.But there is one in a class by himself: Commerce secretary choice Wilbur Ross.Ross has made a fortune in the steel industry — an industry of which the Commerce Department has significant oversight. Indeed, government transition documents show that the Commerce Department is slated to make no fewer than five decisions about steel trade soon after the inauguration which will directly affect businesses that Ross has a stake in."It's on a different order of magnitude and complexity than any other cabinet pick," said Norman Eisen, the White House's chief ethics lawyer in the Obama administration from 2009 to 2011. "Now it's up to him to figure if he can do this job and, if so, how he can do it given his entanglements."Transition briefing documents, which ProPublica obtained through a Freedom of Information Act request, show how closely the Commerce Department is focused on enforcing and monitoring global steel supplies and demand. They makes clear how the department's decisions could greatly benefit ArcelorMittal, the world's largest steel producer, where Ross retains a stake and has long sat on the board (he was re-elected to a three-year term in 2015).Among the impending decisions are rulings on unfair pricing investigations of steel imports from Belgium, France, Germany and Italy. The rulings are due within the first 100 days of the new Trump administration. (See the Commerce Department presidential transition briefing documents here.)Ross has other potential conflicts. While Ross talks tough on China, he is an equity investor in a shipping company with a Chinese sovereign wealth fund. He has also invested in the China Huaneng Group, a state-owned power generator run by the eldest son of Li Peng, the former prime minister.Ross sits on the boards of five publicly traded companies. Among them is the Bank of Cyprus, where he is vice chairman, and where he has been an investor along with Russian oligarchs."His business contacts are deep and wide," said Kurt Schulzke, director of the Corporate Governance Center at Kennesaw State University. "Life could be very complicated for Wilbur Ross if he chooses to hang onto those interests."Ross did not respond to requests for comment and Trump's transition team referred questions to the Commerce Department, while noting that the department's briefing documents were crafted under the outgoing Obama administration.The most obvious potential conflict, experts say, is between Ross and Commerce's International Trade Administration, which oversees trade laws and agreements with other countries. The agency is working on how to stop China's government-supported steel industry from encroaching on U.S. markets and has wide purview over monitoring and enforcement."It's never happened that a Commerce secretary has been so directly involved in the fallout, and rewards, from previous trade deals," said Gary Hufbauer, a former Treasury Department official who specializes in trade policy as a senior fellow at the Peterson Institute for International Economics.Despite Ross' considerable fortune, lawyers and Senate committee officials say there is a path for him to avoid thorny ethics issues. It entails liquidating many of his financial holdings, recusing himself on matters where he might have a personal vested interest, and potentially putting his financial holdings in a blind trust.Those moves would likely dwarf divestitures made by previous cabinet members. Hank Paulson, the former Treasury secretary under President George W. Bush, sold nearly $600 million worth of stock before entering public office in 2006. Penny Pritzker, the Chicago billionaire and Hyatt Hotels executive, stepped down from her position with the hotel chain when she took the Commerce secretary job in 2013.The Republican-led Senate Commerce Committee, which is tasked with vetting the president's appointee for the cabinet position, has repeatedly likened Ross' case to that of Pritzker, who divested from 221 companies and resigned from her job at Hyatt, as a precedent for navigating slippery business conflicts. "As has been the practice with past nominees, the Commerce Committee will carefully scrutinize Mr. Ross' proposal for avoiding conflicts of interest," the Senate committee said in a statement to ProPublica. "In the recent past, candidates with large portfolios have addressed concerns about financial conflicts and achieved Senate confirmation through recusals, divestment, and other steps as outlined in an ethics agreement." (The Senate Commerce Committee has not yet received Ross' ethics agreement proposal.)But Ross' situation may be different. "There are a lot fewer trade conflicts with hotels than the steel industry. That's a pretty qualitative difference," Hufbauer said.What's clear is that Ross plans to rely on his experience with foreign trade in his new public-sector job. In a policy paper published in September with Peter Navarro, a business professor from the University of California at Irvine, about the Trump economic plan, Ross cited his purchase of Pennsylvania's Bethlehem Steel as proof of a broken trade-enforcement system:

"As another problem, it takes a long time to adjudicate trade cases. In the interim, American companies go bankrupt, cheaters take over the market, and the court ruling becomes moot. This happened a few years ago to Bethlehem and 30 other steel companies that went bankrupt waiting for relief."

Bethlehem Steel was one of several U.S. steel companies purchased by Ross and packaged into a $4.5 billion deal with ArcelorMittal in 2005. Ross and his investors net gain on the deal: $260 million.ProPublica is a Pulitzer Prize-winning investigative newsroom. Sign up for their newsletter.

Thought for the day

Nothing funny about tired Saturday Night Live on Fake News NBC! Question is, how do the Networks get away with these total Republican hit jobs without retribution? Likewise for many other shows? Very unfair and should be looked into. This is the real Collusion!

Individual One’s tweet at 4:52 AM - 17 Feb 2019 after a long, hard day of playing golf at Mar-A-Lago on Day Two of our “national emergency.”

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